It’s date night, and there’s nothing to watch at the local
Cineplex. Sadly, this has become a
common complaint. My wife and I
live in a medium-sized, Midwestern college town. There are at least five different movie theaters within a 15
minute driving radius, all of which have multiple screens. Yet, they all feature the same five
movies, screened in multiple versions: 2-D, 3-D, IMAX, etc. Moreover, those five movies often seem
an indistinguishable variation on last month’s offerings: a mix of Superhero
action films, zombie/vampire fantasies, and gross-out humor comedies, whose
formulaic plots hew to narrowly defined genres that emphasize spectacle over
subtlety.

Perhaps my wife and I don’t fall within Hollywood’s target
demographics. But we’re not the
only ones complaining. Acclaimed
filmmaker Steven Soderbergh issued a passionate cri de coeur over the “state of the cinema” in a speech
at last year’s San Francisco International Film Festival. Even Steven Spielberg and George Lucas
have criticized
the blockbuster-heavy film culture they helped to spawn. Spielberg says he struggled
to get his Oscar-winning film, Lincoln,
distributed because it fell outside the mold. If Steven Spielberg is struggling, imagine how bad things
have gotten for lesser-known indie filmmakers.

Lack of diversity in film and other popular media impairs
consumer choice and impoverishes democratic discourse, but what does diversity
have to do with innovation policy?
There are many reasons why Hollywood’s focus has narrowed, but, at
bottom, they all have to do with money.
And the money Hollywood makes is underwritten by hefty indirect
subsidies conferred by the copyright system. Yet, the Constitution tells us the purpose of copyright laws
is to promote “Progress.” We are
therefore entitled to ask whether we are getting our money’s worth. If copyright is not delivering the kind
of cinematic “Progress” that we desire, perhaps it is time to consider
investing in alternative subsidy regimes.

In fact, we as a society already subsidize the production of
film and other creative media through a variety of mechanisms: Besides copyright, subsidies flow
through direct patronage regimes (e.g. NEA grants), tax policy (e.g. deductions
for charitable donations), higher education (e.g. film schools), public arts
infrastructure (e.g. performing arts centers), and communications regulatory
policy (e.g. public access television).
We should look at this entire mix of direct and indirect public
subsidies and consider ways to refocus incentives toward achieving more
diverse, innovative outcomes.

Some may question whether subsidies are called for at
all. Many copyright commentators
are enamored by DIY content created by amateurs. Others place their faith in alternative business models that
could fund diverse, long-tail content through purely market mechanisms. I am less sanguine that such solutions
will suffice to fill the gap. The
gulf between amateur content and mainstream commercial productions is vast, and
Big Content’s distribution clout is unrelenting.

My own approach is therefore more incremental and
evolutionary. In my draft paper, Incubating Indies: Distributed Subsidies for
Diverse Culture, I explore ways to adapt and supplement

existing models to support indie films and other forms of
diverse culture. I focus primarily
on approaches that combine (a) distributed allocation mechanisms with (b) ex ante funding.

By distributed allocation mechanisms, I mean avoiding the
need for centralized decisions as to who gets the benefits. Distributed models are generally more
efficient and democratic than top-down patronage regimes. Copyright offers a good example of a
distributed mechanism: The
copyright system has low threshold entry requirements and broad,
content-neutral criteria as to subject-matter eligibility. But copyrights need to be monetized to
have value. Therefore, in
practice, the copyright decisions leaves the allocation of benefits to be
dictated by the market; works that
sell well enjoy disproportionate benefits.

The problem with copyright is that the rewards, if any, only
arrive ex post, after the initial
production expenses have been incurred.
As Lisa Larrimore Ouellette observes in her blog
post for this conference, and co-authored paper with
Daniel Hemel, delayed and speculative rewards under an ex post incentive regime can deter creative investment. I argue that such deterrent effects are
particularly injurious when it comes to resource-intensive works produced by
independent artists, many of whom are unable to bear the up front costs
alone. Yet, as commercial studios
narrow their focus to big-budget “tent-pole” movies, external backing for indie
films has become increasingly unavailing.

For an alternative regime that operates in a both
distributed and potentially ex ante fashion,
we could look to tax policy. Tax
deductions for charitable donations allow individual taxpayers to indirectly
allocate tax subsidies to eligible arts non-profits. Unfortunately, because such deductions are skewed toward the
very wealthy, the results are not as diverse and democratic as they could be
(opera companies benefit more than indie films), nor is such funding typically
oriented ex ante. Allowing tax deductions for donations
to indie film projects on crowdfunding sites such as Kickstarter would redirect
tax subsidies explicitly toward ex ante production
in ways that would benefit a much more diverse body of creative works.

State governments already offer subsidies that are targeted
directly at film production, but the benefits flow disproportionately to
Hollywood blockbusters. Here too,
a reallocation of benefits seems warranted. By reserving production subsidies for lower-budget local
films, states could avoid subsidizing “runaway productions” that parachute in
from Los Angeles and instead nurture home-grown indie film industries that
would generate more lasting economic benefits.

Nor are tax incentives the only means to provide
distributed, ex ante subsidies. Publicly funded investments in creative
infrastructure that enhance productive capabilities can generate both direct
and indirect benefits. A variety
of different actors can decide how best to use the shared resources, yielding
sometimes unexpected payoffs. Public
access television provides an existing model of such publicly-funded
infrastructure in the United States, albeit one that has long suffered from
neglect. Brazil’s Culture Points
program offers a more successful example overseas. Public-private partnerships there operate community centers
for digital production where ordinary citizens can take advantage of equipment
and training to “create culture.”
My papers considers ways that such a “cultural incubator” infrastructure
model could be translated to the United States context.

Finally, indirect subsidies do not have to be limited to ex ante production assistance. Improving market access for indie
productions represents a further distributed support strategy. Copyright offers a familiar example of
such a market-based subsidy.
However, market access can be conferred in ways other than IP rights. For example, movie theaters could be
required or incentivized to offer a more diverse selection of movies. In addition, developing better online
recommendation tools would serve as a public resource that expands the market
for long-tail content by allowing users to find diverse works that suit their
idiosyncratic tastes.

These examples hardly exhaust the range of possibilities. However, they do illustrate the
potential for innovative thinking in the realm of innovation policy. If we want to engender more diverse
forms of creativity, we should diversify our existing menu of support.

Sean A. Pager is an associate professor of law at Michigan State. He can be reached at spager at law.msu.edu